Technological change over the past three decades has altered most of thebasic conditions in the electric power industry. Because of technical progress, thedominant paradip has shifted &om the provision of electric power by regulatedand vertically integrated local natural monopolies to competition and verticalseparation. In the first essay I provide a historical context of the electricindu~ry's power current dereplation debate. Then a dynamic model of inducedinstitutional change is wed to investigate how endogenous technologicaldvu~ccmtna have indud dd institutional change in the grnmtion andtransmission segmcntc of the electric power industry.Because the F d d Energy Rqulatory Commission (FERC) orderedregulated utilities to provide open access to their transmission networks and toMuch of the theoretical literature on economic regulation assumes thatinstitutional change is exogenous to the economic model." For example, theseminal work of Stigler [1971], Peltzman [1976], and Becker [I9831 - known asthe Chicago theory of regulation - assumes that regulators and regulatory policywill seek to presewe a politically optimal distribution of rents across a coalition ofwell-organized groups (Winston, 1993). Changes in the technological orinstitutional attributes of an industry clearly occupy second order status in thattheory. For example, deregulation in the Chicago theory is because of thediminution of relative rents across vested interests - a view that I believe neglectsthe dynamk nature of industrial deregulation. Here, I will apply a dynamic modelof induced institutional change, due to Hayami and Ruttan [1984, 19851, toexplore the endogenous restructuring process occurring in the electric powerindustry.By using a theory of induced institutional change, I analyze therestructuring of the electric power industry like a commodity, subject to the&mic forces of supply and demand: demand from affected agents and supplyby legidaton and regulators. On the demand side, technical change in thegeneration and tmsrnission of dectric power has created new sources ofeconomic wealth and thereby produced an institutional disequilibrium." Oneo b a e ~ l an institutional disequilibrium when both vested and non-vested agentsopportunistically seek new wealth with guile." In this environment, non-vested.....-....,....-...,..tested for theQ1 PC1 bus cardBoth these projects mere sofixare des elopment efforts tonards contributing to dlfferentaspects of Roboucs and lZ1echatronics projects m the Controls and Roboucs Group..